2-Year Supply Digested Easily, Cover Ratio Jumps Higher

This week’s reaffirmation of the BoJ’s dovish credentials, combined with the Japanese bias for domestic securities ahead of FY end & cross currency basis-related FX hedged yield pickup for some quarters of the foreign investor sphere outweighed any headwinds from offshore investors’ propensity to sell Japanese bonds ahead of the end of the Japanese FY when it came to today’s 2-Year JGB auction. That allowed the cover ratio to hit the highest level observed at a 2-Year auction since April ’20, with the price tail holding tight and low price topping wider expectations (which stood at 100.050)